The Government may be forced to take back millions of euro it advanced to broadcasters such as TG4 and RTÉ following a decision by the EU Commission involving the Dutch authorities.
The European Commission has ordered the Dutch government to recover €76.3 million in aid paid to NOS, the umbrella organisation for its state broadcasters. The commission said the payments, made between 1994 and 2005, exceeded the needs of broadcasters for public service purposes and led to NOS building up financial reserves.
EU competition commissioner Neelie Kroes said "excess compensation" unnecessarily distorted competition and allowed public service broadcasters to operate in commercial markets on more favourable grounds than competitors who did not receive state aid.
A spokesman for the commissioner said a similar investigation was taking place into broadcasters in Ireland. RTÉ and TG4 are aware of the investigation and the Department of Communications has been in contact with the EU authorities.
RTÉ may be in a stronger position than TG4 because it has been receiving licence fee revenue, via the Government, before Ireland joined the EU in January 1973. However, the more recently established TG4 may be in a a more vulnerable position.
In 2005, TG4 had a budget of €27.1 million. Of this, €23.9 million was grant in aid from the Exchequer, with the remainder coming from net commercial income and some assistance from RTÉ.
The grant in aid is paid by the Department of Communications. If the commission orders a recovery of funds, the Government would have to deduct it from the broadcasters.
However, such a recovery of funds would be the most drastic outcome and a lesser reprimand is also possible. TG4 has been growing its viewing figures over recent years, with soap operas like Ros na Rún driving audiences. The station has a 3.3 per cent market share.
For aid from the State to be lawful, the broadcaster receiving the money had to be governed by a strictly defined mandate, the funding has to be proportionate and it cannot be used to fund monopolistic behaviour.
It is understood the Department of Communications is hoping that legislation setting up a new Broadcasting Authority of Ireland will answer some of the commission's concerns about the Republic's arrangements.
It has also been revealed that a recent decision by the Revenue Commissioners to tax RTÉ licence fee may have been triggered by the EU investigations.
It is understood that, in complaints lodged with the competition authorities in recent years, TV3 pointed to the lack of corporation tax on RTÉ's licence fee revenue.
RTÉ received €170 million in licence fee revenue in 2005. Based on a 12.5 per cent tax rate, this would produce a liability of about €21.2 million.
